A Comment -- General Comments From an Expert (A Commentary)

Natural gas. With the frac technology, we have discovered a lot of natural gas. Once we establish pipelines to ship it offshore, prices will stabilize but that will require time. He likes to buy companies that have both natural gas and oil and wait.

Markets: Unemployment report last Friday – view that number in context – The US is getting stronger. Europe was a concern last August but as US gets stronger, Europe is less of a factor. If we can keep the current momentum going then we are in a pretty good phase. Large cap tech and energy are strong. Social Networking is strong. There is a little bit of a feel of a bull market, especially in social marketing. Bears are getting worried because market doesn’t seem to want to go down on bad news from Europe.

US. Had a surprisingly strong jump in job figures last month but he is always suspicious of monthly numbers. You have to look at quarterly trends. There has been an acceleration in job creation in the last 3 months. 2 things that are going to drive the US economy is 1) about 1 million more cars being bought last year and 2) the housing that starting to get cleared state-by-state. Job creation is not only aided by these 2 things but also aids those 2 things.

Markets: Found attractive valuations last fall and winter. Low prices mean great dividend yields. This was what he was waiting for. Canada stock market outperformed most of rest of world until last year. Most Canadian stocks are quite a bit more expensive than stocks elsewhere. Cash down from 70% down to 50% with a lot of orders in.

Lofecos: Canadian insurance companies in reasonable good shape in terms of capital. They are suffering from the stock market and that will rebound. They also suffer from long-term low interest rates.

In the past bonds were yielding in excess of inflation. For 20 years, bonds outperformed stocks. Today, Inflation is 2.5% but gov’t bonds are yielding 1.5%. Regular bonds make no sense as an investment longer term. Don’t buy bonds if you want to eventually buy and hold stocks later on.

Dividend paying stocks that don’t have a lot of growth move with interest rates. Rates go down and stocks go up. Real return bonds go up when people expect inflation to rise.

UK Banks - Barkley’s and Lloyds: Doesn’t play in that space. Has broader concern with what is going on in Europe. Less worried in last 6-7 weeks but there is more headline risk in the EU. Will have a negative impact on UK banks.

Resource stocks. There was a lot of tax selling last year and now there is a recovery of sorts. They haven't gone up too much so they can go up more before the next correction. Future corrections will not be as deep. Thinks companies are quite active in mergers and acquisitions right now.

Market. Market conditions are getting better, not just in North America, but globally. Can't see a QE3 at this point. QE2 wasn't even that effective.

Commodities. Copper looks awfully good in here. Has had a huge off take from their inventories and cancelled warrants. The demand is out there.

Greece. Market has stopped worrying in a major way. There is sort of a disconnect now between Greece and the rest of Europe and North America so the chances are going down of having a messy default. Their next payment is March 20 so there is a good 6 weeks to fix this.

Markets. Holding roughly 10%-12% cash. This is quite a bit down from where he was in the fall. This is still elevated from normal. We are more than due for a pullback and he has the cash ready as there are things he would like to buy at the right price.

Markets. The S&P 500 for the last 10 years shows the last 5 a little more encouraging but the market seems to be overbought in the near-term. PE multiples are reasonable and he is optimistic the economy globally is improving. Feels that economic growth is going to be pretty good for the coming 1.5 years.

Markets. Not expecting any great plunges. If there is any weakness, he sees it as a buying opportunity. Europe has been doing the right things and it takes a great deal of time to finally resolve all these things. There are strong directional indicators that things are getting sorted out. Currently he is about 65% equities and 35% cash and fixed.